Monday, October 15, 2012

Buying a Short Sale


Provided By Realty Times


An ailing economy has had far-reaching effects. Homeowners nationwide have struggled to manage ballooning mortgage payments in the aftermath of layoffs and long unemployment lines. They've seen home values plummet, all while becoming upside down in their loans.
Foreclosure rates remain high and account for one-third of all home sales. Some homeowners have found relief in the form of short sales.

A short sale is a sale where the home sells for less than the seller owes, but the lien holder (bank, etc) agrees to this price and this loss. A short sale means the seller can avoid foreclosure, a stain that would have otherwise remained on their credit reports for seven years.
What does buying a short sale home mean? First, a short sale can mean a bargain. That's what all buyers want to know, right!?

If you are planning on searching out a short sale bargain, however, it's important you understand what this sort of purchase will entail. Are there reasons you shouldn't buy a short sale?
First, short sales will require you to be a patient buyer. You may have agreed to a price and terms with the seller, but the lender must then agree to all terms before you can close. They are notorious for taking their time -- up to several months. There is legislation currently in Congress that would require lenders to answer within 45 days.

Lenders also want to be sure you have financing in order. They love cash offers, which keep deals short and sweet. Come to the table with pre-qualification and approval in order.
A short sale probably means any contingencies are out the window. This isn't a time for hard-nosed negotiations. A bank has few emotions. They are all about the bottom-line. Are you wanting repairs? That probably won't happen.

Only two out of five short sales are approved by lenders. So, you may spend a lot of time waiting on a reply, only to be rebuffed.
Additionally, short sales can be contractual nightmares. You'll need to employ a good real estate attorney so that you know what you are buying. Most buyers aren't fluent in legal terminology.
After the robo-signing nightmare of the past decade it's more important than ever that you get a clear title on any home you buy. Do not enter into a quit-claim deed. Be sure you are getting a good, clear title to any home. This may also mean enlisting the expertise of a title officer to see if there are any additional liens on a property.
Short sales are a time to be sure all legal aspects of the deal are clear and gone over with a fine-toothed comb by the appropriate professionals. Do this and you could be in for a great deal during a time of historically low interest rates.

No comments: